3 FTSE 100 dividend stocks I'd never sell


The best way to fund a comfortable retirement, in my view, is to hold a diversified portfolio of top-quality FTSE 100 shares paying steady dividends. Here are three that I reckon fit the 'dividends for life' bill.


Insurance cash

The insurance industry was hit by the financial crisis, and Legal & General(LSE: LGEN) shareholders took a dividend haircut. But the annual cash payment was only depressed briefly and soon started climbing again -- over the past five years we've seen dividends come storming back, way ahead of inflation.

In 2016, the firm paid out a very attractive yield of 5.8%, and that's forecast to rise to 6.1% this year and 6.4% next. But how reliable is that likely to be?

When 2016 results were released early in March, the insurer reiterated its progressive dividend policy, "reflecting the group's expected medium term underlying business growth." Liquidity measures looked good and the balance sheet was strong, and I really can't see the insurance sector getting itself overstretched again any time soon.

And if you remain aware that any single sector can have a bad few years and you keep your income sources diversified, I reckon Legal & General should keep you well rewarded for many years.

What disaster?

If you were asked to name a disaster company, it would be hard not to think of BP(LSE: BP). We had the Deepwater Horizon catastrophe and then the company had to face a lengthy oil price slump.

But you know what? The dividend was briefly slashed to help pay for the Gulf of Mexico cleanup, but it was quickly reinstated and started rising again. And it has been maintained right through the down spell for oil prices. BP chief Bob Dudley said we were probably in for a few years of cheap oil, but that the firm intended to keep paying its dividend. He's kept his word.

There's a forecast yield of 6.8% on the cards this year and though it won't be covered by forecast earnings, cover should be regained by 2018. That's based on the current outlook with oil at around $50 per barrel -- and I can't see how it can stay that low for much longer without some of the oil-producing nations going bust.

If the recent dividend performance shows what BP can do during one of its worst spells ever, just think what the long-term future should hold.

Post profits

Royal Mail Group(LSE: RMG) is another long-term dividend favourite of mine, with a nicely progressive policy that delivered a yield of 4.7% in the year to March 2016. There's a hike to 5.6% predicted for this year, and analysts are expecting that to be lifted as high as 6% by 2019.

On the downside, it's not exactly an exciting business with great growth on the cards -- in fact, earnings are likely to be pretty flat over the next three years. But dividend cover by earnings should be strong at around 1.7 times, and I reckon that makes a big difference to the safety of the annual payout. Plus I can see efficiency improvements in the coming years meaning we'll see a steady stream of cash sufficient to keep investors happy for a long time to come.

We're also looking at P/E ratios of only around 10, so any sign of rising earnings could bring an uprating of the share price too.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.